The Australian Dollar rose on Monday, remaining in positive territory as traders carefully analyzed mixed central bank cues from Asia and the US. The tone was still wary, but not negative. Instead, the market just leaned toward stability to revive the AUD.
One early reprieve for the Australian Dollar was from China. The People’s Bank of China kept its key lending rates unchanged. The one-year Loan Prime Rate at 3.00% and the five-year rate at 3.50% were held steady, according to a statement on the bank’s website. This was a steadying rather than a boosting move, and that sort of reasonable tone can play well with risk-correlated currencies such as the Aussie.
But now, public and political attention is turning inward. Traders are on edge as they await the Reserve Bank of Australia’s meeting minutes. These minutes are expected to provide clues on how concerned policymakers still are about inflation. Market pricing implies a 27% probability of a rate hike to 3.85% at the next RBA board meeting, suggesting there is still tightening risk in store. Ahead, this emphasis on the RBA is part of the reason why AUD is catching bids – if relatively restrained ones.
US Dollar Softens as Fed Signals Patience
On the flip side, a modest US dollar profit-taking pressure was exerted throughout the day. The Dollar Index fell toward 98.60 as traders assessed new comments from the Federal Reserve. Policy is “well positioned to wait and see” what 75 basis points of earlier rate cuts mean, Cleveland Fed President Beth Hammack said, according to Bloomberg.
In addition, US inflation numbers pointed to additional cooling. The C.P.I. slowed to 2.7 per cent in November, while the core remained elevated at 2.6 per cent — its slowest pace since 2021. Keeping these numbers to the downside lightened some of the pressure on the Fed to be aggressive, a factor that would otherwise have provided some support for USD.
AUD/USD Holds Near Key Technical Levels
From a technical perspective, AUD/USD is trading near 0.6620, not far from its short-term averages. There is some technical resistance now above 0.6570, and a firm break, possibly beyond the mid-September highs (near 0.6685), could pave the way for additional gains, while a breakdown of broader support would refocus attention on downside risk.
